According to Oregon Geographic Names, Damascus can date its existence as a community back to 1867, when a post office by that name was established. That post office was closed in 1904, but re-opened in February 2007 inside a coffee house. The original heart of the community is along Oregon Route 212, which as of 2004 serves as part of the city's southern boundary.
A 2000 decision by Metro to expand Portland'surban growth boundary into the area prompted some citizens of the community to submit Measure 3-138, a measure on the ballot for the 2004 general election in November. The initiative's passage resulted in the incorporation of the former unincorporated communities of Damascus and Carver into the City of Damascus, a step which prevents nearby cities from annexing the community.